Thinking about swapping braais and biltong for beaches in Portugal or the urban buzz of London? Moving abroad is thrilling, but it comes with more than packing boxes and booking flights. If you want your dream life overseas without unwelcome tax surprises, understanding tax emigration, tax residency, and the tax implications of emigrating from South Africa is essential. Failing to plan properly can mean still paying South African tax on income, investments, and retirement savings—even from halfway across the world.
Top three takeaways for expats on tax emigration
- Formalise your non-resident status without delay – Until SARS confirms you’ve ceased tax residency in South Africa, you remain liable for tax on your worldwide income, even if you live and work outside of SA.
- Understand the impact on retirement savings – Tax emigration is the only legal way to access your retirement annuity before age 55, but you must remain a non-tax resident of South Africa for at least three consecutive years.
- Plan for taxes and reporting abroad – Proper planning can reduce South African exit tax exposure, ensure expat tax compliance, and help you take full advantage of foreign earned income tax exemptions and double tax agreements.
Read more: Why 50,000+ South Africans chose tax emigration and what it solved for them.
What is tax emigration from South Africa?
What used to be called financial emigration from South Africa has now been phased out and replaced with tax emigration. Tax emigration is the process of formally notifying SARS that you no longer meet the criteria to be considered a tax resident in South Africa.
Once approved by SARS, your status changes from tax resident to non-tax resident of South Africa, which affects how your income, investments, and retirement savings are taxed.
It’s important to note that tax emigration does not change your citizenship; you can still be a South African citizen while being a non-resident for tax purposes. This distinction matters because South Africans who move abroad but keep assets in South Africa may still have South African tax on foreign income and other reporting obligations.
Read more: Tax emigration FAQs for South African expats living abroad.
Why tax emigration matters if you’re leaving South Africa
If you’re working overseas as a South African or planning a permanent move, formalising your non-resident tax status protects you from ongoing tax obligations in South Africa. However, until SARS confirms that you’ve ceased tax residency in South Africa, you remain liable for tax on your worldwide income, even if most of your earnings come from abroad.
Failing to complete tax emigration correctly can lead to complications such as:
- Unintended double taxation on foreign income if South African double tax agreements are not correctly applied or documented.
- Unexpected exit tax liabilities on certain assets when you cease tax residency in South Africa.
- Delays in accessing retirement savings, inheritances or transferring funds internationally, particularly if your non-resident tax status is not formally confirmed.
In short, if you want a smooth transition abroad, formally ceasing tax residency in South Africa is a critical step.
Read more: Why South African expats must stay sharp on SARS tax residency rules.
How SARS determines tax residency
SARS uses two main tests to determine tax residency in South Africa:
- Ordinary residence test: This test looks at where your primary home, family, and assets are located. Even if you spend significant time abroad, if your “centre of life” is still in South Africa, you are considered a tax resident in South Africa.
- Physical presence test: The physical presence test calculates the number of days you spend in South Africa. You are deemed a resident if:
– You spend 91 days or more in the current tax year,
– 91 days or more in each of the previous five tax years, or
– 915 days or more in total over the previous five tax years.
Once you’ve left South Africa, your non-resident status begins after 365 full calendar days of absence. It is worth pointing out that you can fail to meet the criteria of the physical presence test, and still be considered a tax resident if SARS feels you have not adequately severed ties with South Africa and that your intention to return at some point in the future has not been clearly negated.
Read more: Taxing matters: a guide to understanding South African tax residency for expats.
Tax implications of emigrating from South Africa
One of the biggest considerations is how tax emigration impacts your retirement savings. If you’re planning to leave permanently, it’s important to understand how ceasing tax residency in South Africa affects your ability to access these funds.
Accessing a retirement annuity before age 55 is possible, but only once you have formally ceased tax residency in South Africa and maintained a non-resident tax status for at least three consecutive years.
To do this, you will need to:
- Notify SARS and go through the process of ceasing tax residency in South Africa, with supporting documentation.
- Remain a confirmed non-tax resident of South Africa for an uninterrupted period of three years.
For retirement annuities and preservation funds, this three-year rule must be met before early access is granted. It’s also important to note that when you cease tax residency, you may trigger exit tax on certain assets, based on their deemed market value the day before your status changes.
Read more: Tax planning secrets you must know before leaving South Africa.
Steps to apply for tax emigration
Here’s a clear outline for those weighing up tax emigration from South Africa:
- Determine your residency status using the ordinary residence and physical presence tests.
- Notify SARS that you intend to cease tax residency in South Africa.
- Obtain confirmation from SARS once your status as a non-tax resident of South Africa is formalised.
- Assess retirement and investment accounts for early withdrawal options, taking into account the three-year rule.
- Plan for double taxation by reviewing relevant South African double tax agreements with your new country of residence.
- Consult an expat tax specialist for guidance on ongoing reporting obligations and strategies to legally minimise tax exposure.
Read more: Tax Emigration 101 – A roadmap for migrating your finances.
FinGlobal: expert expat tax services and advice
Relocating from South Africa is more than packing your bags—it’s a financial decision that requires careful tax planning. FinGlobal’s team of cross-border specialists can help you:
- Clarify your South African tax residency status with SARS.
- Navigate tax on foreign income in South Africa and exemptions.
- Prepare for exit tax obligations.
- Plan for early withdrawal of retirement funds.
- Ensure compliance with South African expat tax requirements while abroad.
Understanding tax for South Africans working abroad is essential, whether you are already overseas or planning your move. Speak to a FinGlobal specialist today to make sure you stay compliant, avoid unnecessary tax, and get it right from the start.
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